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Goods vs. services: from the perspective of consumer spending.

William D. Passero, "Goods vs. Services: From the Perspective of Consumer Spending," presented at the American Council on Consumer Interests Annual Meetings, Chicago, IL, April 6-9, 1988.

In recent years, one of the major themes which has emerged in tracing the course of the American economy has been the basic shift from the production of goods to the provision of services. This paper examines the phenomenon of the shift towards a service economy from the perspective of consumer spending. The first section analyzes aggregate data from the Consumer Expenditure Survey with other national sources of data for the period 1972-73 to 1984-85. The results show that purchase decisions of consumers painted a different picture of the economy-one much less services-oriented-than that portrayed by employment or output measures. In the aggregate, U.S. consumers have allocated an increasing share of their consumption dollar to services. Nonetheless, overall total consumption has been divided fairly evenly between goods and services.

Several factors contribute to the disparity between consumption estimates and the other data sources. The range of services that consumers can directly purchase is markedly smaller than the range of services that workers produce. In fact, expenditures by consumers for goods actually reflect the costs of many of these services, which are incorporated into the prices of goods. In addition, the consumption data sources account for the disposition of savings differently than the employment and output data sources.

While the consumption data from the Consumer Expenditure Survey showed U.S. households in the aggregate spending slightly more on goods than services, various subgroups of the population may have exhibited different spending patterns for goods vis-a-vis services. The second section of the paper focuses on the allocation of spending between goods and services for subgroups of the population, defined by age and by income in 1985. It is found that, with some important exceptions, these subgroups have behaved much like the population as a whole. Subgroups located at the "ends" of the distributionfor each characteristic-the youngest, the oldest, and the poorest-displayed distributions of expenditures between goods and services that deviated furthest from the distribution for all households. The relative absence or presence of purchases of "big ticket" items, such as cars, trucks, and homes, in their consumption profiles, seemed to account for these deviations.
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Title Annotation:Consumer Expenditure Survey Conference paper summaries
Author:Passero, William D.
Publication:Monthly Labor Review
Date:Aug 1, 1988
Previous Article:The autocovariance of expenditure shares from consumer expenditure survey data.
Next Article:Spending patterns of men and women.

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